Fauji Cement Co sees profit expand YoY in FY23

Fauji Cement Co Ltd (FCCL) has earned profit after tax of PKR7.4bn (US$24.34m) in FY23, compared to PKR7.1bn in FY22. The result comes despite the retrospective increase in the Super Tax rate from four per cent to 10 per cent having an impact of PKR1.98bn and taking the effective rate to 39 per cent. The gross finance cost also advanced from PKR1.2bn to PKR3.64bn to during this period.

According to the company, it has continued to focus on implementing cost optimisation initiatives, including an increase in the use of local coal, higher use of alternative fuel, and increasing its captive solar generation capacity to 40MW, which, along the the waste heat recovery (WHR) system, now meets almost 60 per cent of FCCL's power requirements during its daytime operations. All FCCL cement plants now have solar captive power capacity.

In addition, fixed cost rationalisation has contributed to achieving the above results.

Low GDP growth, high costs across the entire spectrum of construction materials, and a cut in the Public Sector Development Programme saw cement dispatches decline by 15.7 per cent YoY in FY23. The 12-month period also saw a massive currency devaluation as the Pakistan rupee fell from PKR227 to PKR287 against the US dollar. 

Expansion projects
The brownfield expansion of 2.1Mt at Nizampur was completed in a record time of 18 months and within the budgeted cost, despite all the economic headwinds and logistical challenges due to COVID-19.

The greenfield expansion in DG Khan is progressing according to schedule and is expected to come online by the end of the 4Q23.

The board of directors has approved the setting up of a 7.5MW solar power plant at the new DG Khan cement plant site in line with the company's strategy to optimise costs.